Investor Glossary-varianceInvestor Glossary-varianceInvestor Glossary-varianceInvestor Glossary-varianceInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Variance

The HTML to link to this page
 

Variance is a measure of volatility. Variance is calculated as the average squared deviation from the mean. The Capital Asset Pricing Model uses variance as a measure of investment risk. Investments with higher volatility (variance) have greater risk. CAPM postulates that the risk (variance) of an investment portfolio consists of both market risk and specific risks associated with each asset. While market risk is unavoidable, portfolio variance can be minimized and the risk associated with specific assets reduced if the investor owns a diversified mix of assets. Most financial advisors seek to minimize portfolio variance for their clients by recommending that they invest in a diversified portfolio which includes both large and small market capitalization domestic stocks, as well as bonds, international equities and real estate.



Rate this variance definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: current ratio, quality assurance, labor relations, Key Rate Duration, 1031 exchange, APR, 1035 exchange, open position, LIBOR, phantom income, minority interest, retained earnings, option premium, deferred revenue, class C shares, balance sheet, stock market close, stock split, irrevocable trust, margin rate, average price per share, cancelled check, in escrow, risk management, inflation, FTSE, dividends payable, command economy, required rate of return, Zero Cost Collar, ex-dividend, implied volatility, limit order, 144a, debt service coverage, reverse mortgage, diluted share, wholly-owned subsidiary, per diem, real GDP, covered put, EBITDA, 401a, liquidity ratio, FICO score, ex-dividend date, annual return, VIX, deferred tax


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use